Bengaluru’s housing market poised for steady growth in FY26, ultra luxury slows

Bengaluru housing to grow 3–5% in FY2026, led by mid & luxury demand; affordable dips, ultra-luxury slows, YTS stays stable

Bengaluru’s residential real estate sector is set for measured expansion in FY2026, with sales volumes projected to rise by 3–5%, according to a fresh analysis by the Investment Information and Credit Rating Agency (ICRA). The report highlights a structural shift in the city’s housing landscape, where premium and mid-income homes are increasingly driving demand, signalling a departure from the city’s earlier reliance on affordable housing. 

Between FY2021 and FY2025, Bengaluru accounted for 14–15% of total residential sales across India’s seven largest metros, ranking as the country’s fourth-largest market. After hitting a decadal peak of 102 million square feet (msf) sold in FY2024, sales dipped slightly to 99 msf in FY2025, largely due to a steep 41% fall in affordable housing. Mid-income and luxury segments, however, grew by 3% each, cushioning the decline. 

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Momentum has returned in FY2026, with the city recording 52 msf of sales in the first half, a 14% year-on-year increase. The second half is expected to remain stable, supported by a strong pipeline of launches scheduled for Q4. 

Supply has also surged, with new launches reaching 124 msf in FY2025, reflecting a 34% CAGR since FY2021. ICRA expects launches to grow another 10–12% in FY2026, aided by healthy inventory, strong demand in the ₹2–3.5 crore bracket, and streamlined e-khata processes. 

Market stability remains intact, with the Years to Sell (YTS) metric at a comfortable 1.1 years as of September 2025, despite launches outpacing sales. By March 2026, YTS is projected to rise modestly to 1.2–1.4 years. 

A notable trend is the dominance of luxury housing, which accounted for 49% of launches in H1 FY2026, up sharply from 19% in FY2021. Ultra-luxury demand, however, has begun to cool, prompting developers to tread cautiously in that niche. 

ICRA concludes that Bengaluru’s housing market will continue to expand steadily, anchored by mid-income and luxury demand. 

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